We have all heard the stories about the cuts in public spending the new Coalition government is considering. Every government department is being asked to identify significant cost savings, and the Department for Transport (DfT) is no exception. We’re expecting a White Paper on spending in October – so could changes be on the menu for smart ticketing?

There is currently a head of steam behind smart ticketing in the UK. The Oyster scheme in London is considered to be one of the most successful smart ticketing schemes in the world; smart ticketing schemes (both ITSO and non-ITSO) have been implemented in Cheshire, Nottinghamshire, Southampton, Yorkshire, and the NoWcard area of north west England. Planning for Centro’s scheme in the West Midlands is at an advanced stage, and the devolved administrations of Scotland and Wales have also been active. 12 million Concessionary Travel cards have been issued, and ITSO is now a requirement in all new rail franchises.

However, there are still no commercial smart ticketing schemes, and no integration of bus and rail ticketing. DfT considers this to be a “market failure”. It is disappointed in the lack of progress because it sees clear benefits to be had from smart and integrated ticketing. (It commissioned the “Detica Report” which detailed these.) It sees encouraging the use of public transport (“modal shift”) to be to the benefit of the economy and the environment.

In 2010 DfT has substantially oiled the wheels. It is investing substantially in the integration of Oyster and ITSO. It has provided grants totalling £20m to the 9 largest conurbations in England, and is paying an extra 8% Bus Service Operators’ Grant (BSOG) to commercial operators installing smart card readers on buses. Prompted by this, the 9 urban areas in question have sprung into action and have all submitted plans to DfT for how they will spend the money. Their circumstances are all different, but we can expect to see several HOPS systems implemented in the next year, in some cases being shared by many Transport Authorities. In addition, the BSOG grant appears to be encouraging certain commercial operators to participate at a higher level of willingness than previously, with Go Ahead leading the way.

The 9 English cities believe this funding is secure and is not subject to the new government’s spending review. But what can we expect from a process in which DfT has been asked to find a headline £683m of savings? Conservative transport priorities include:
• No third runway at Heathrow or further runways at Gatwick or Stansted
• High speed rail lines, construction beginning 2015
• Reform railways to provide a better focus on tackling problems that matter most to passengers, like overcrowding
• Grant longer, more flexible franchises to incentivise private sector investment in improvements like longer trains and better stations
• Support Crossrail and electrification of the Great Western line to South Wales
• Introduce a moratorium on building on disused rail lines

Any reading of the news since the election in May will see the reaction to these proposals. There is heavy lobbying going on, related to projects which people and organisations see under threat from cost savings. These focus especially on rail projects; very little lobbying is bus focused, and there is a complete silence on the subject of smart ticketing.

The new Secretary of State for Transport, Philip Hammond spent the last 3 years in opposition as Shadow Chief Secretary to the Treasury. He is considered to be a numbers man and has had a steep learning curve in his unexpected Transport portfolio. We can expect that he will be determined that DfT plays its full part in achieving the government’s required cost savings. We might expect the Liberal Democrat Secretary of State for Energy & Climate Change, Chris Huhne, to press hard for transport initiatives that encourage people out of their cars. However, his focus so far has been on plugging the country’s looming energy gap without relying on fossil fuel and nuclear power stations.

So what legislative changes might we expect following the October spending review? Transport will not be immune from the spending cut pain. Here are some personal predictions for what will come:
• The qualification age for Concessionary Travel cards will be raised from the current 60
• Concessionary Travel cards will become means tested
• There could be changes to the way travel authorities are reimbursed for concessionary travel, leading to winners and losers
• The 8% BSOG differential to bus operators for smart ticketing will be reduced or removed, along with other BSOG elements
• Encouragement of greater competition in bus services at the local level, perhaps with a threat to the Block Exemption agreement for Multi-operator travel card schemes, at least for smart cards

Otherwise there is nothing too scary in what we have heard announced or discussed so far. Compared to the mega cost of rail projects, smart cards for transport ticketing is small fry; benefits to be gained are limited and potentially conflict with the goal of a greener society. But like everyone else, we’re all holding our breath…

By Trevor Crotch-Harvey, Fenbrook Consulting

We have all heard the stories about the cuts in public spending the new Coalition government is considering. Every government department is being asked to identify significant cost savings, and the Department for Transport (DfT) is no exception. We’re expecting a White Paper on spending in October – so could changes be on the menu for smart ticketing?

There is currently a head of steam behind smart ticketing in the UK. The Oyster scheme in London is considered to be one of the most successful smart ticketing schemes in the world; smart ticketing schemes (both ITSO and non-ITSO) have been implemented in Cheshire, Nottinghamshire, Southampton, Yorkshire, and the NoWcard area of north west England. Planning for Centro’s scheme in the West Midlands is at an advanced stage, and the devolved administrations of Scotland and Wales have also been active. 12 million Concessionary Travel cards have been issued, and ITSO is now a requirement in all new rail franchises.

However, there are still no commercial smart ticketing schemes, and no integration of bus and rail ticketing. DfT considers this to be a “market failure”. It is disappointed in the lack of progress because it sees clear benefits to be had from smart and integrated ticketing. (It commissioned the “Detica Report” which detailed these.) It sees encouraging the use of public transport (“modal shift”) to be to the benefit of the economy and the environment.

In 2010 DfT has substantially oiled the wheels. It is investing substantially in the integration of Oyster and ITSO. It has provided grants totalling £20m to the 9 largest conurbations in England, and is paying an extra 8% Bus Service Operators’ Grant (BSOG) to commercial operators installing smart card readers on buses. Prompted by this, the 9 urban areas in question have sprung into action and have all submitted plans to DfT for how they will spend the money. Their circumstances are all different, but we can expect to see several HOPS systems implemented in the next year, in some cases being shared by many Transport Authorities. In addition, the BSOG grant appears to be encouraging certain commercial operators to participate at a higher level of willingness than previously, with Go Ahead leading the way.

The 9 English cities believe this funding is secure and is not subject to the new government’s spending review. But what can we expect from a process in which DfT has been asked to find a headline £683m of savings? Conservative transport priorities include:
• No third runway at Heathrow or further runways at Gatwick or Stansted
• High speed rail lines, construction beginning 2015
• Reform railways to provide a better focus on tackling problems that matter most to passengers, like overcrowding
• Grant longer, more flexible franchises to incentivise private sector investment in improvements like longer trains and better stations
• Support Crossrail and electrification of the Great Western line to South Wales
• Introduce a moratorium on building on disused rail lines

Any reading of the news since the election in May will see the reaction to these proposals. There is heavy lobbying going on, related to projects which people and organisations see under threat from cost savings. These focus especially on rail projects; very little lobbying is bus focused, and there is a complete silence on the subject of smart ticketing.

The new Secretary of State for Transport, Philip Hammond spent the last 3 years in opposition as Shadow Chief Secretary to the Treasury. He is considered to be a numbers man and has had a steep learning curve in his unexpected Transport portfolio. We can expect that he will be determined that DfT plays its full part in achieving the government’s required cost savings. We might expect the Liberal Democrat Secretary of State for Energy & Climate Change, Chris Huhne, to press hard for transport initiatives that encourage people out of their cars. However, his focus so far has been on plugging the country’s looming energy gap without relying on fossil fuel and nuclear power stations.

So what legislative changes might we expect following the October spending review? Transport will not be immune from the spending cut pain. Here are some personal predictions for what will come:
• The qualification age for Concessionary Travel cards will be raised from the current 60
• Concessionary Travel cards will become means tested
• There could be changes to the way travel authorities are reimbursed for concessionary travel, leading to winners and losers
• The 8% BSOG differential to bus operators for smart ticketing will be reduced or removed, along with other BSOG elements
• Encouragement of greater competition in bus services at the local level, perhaps with a threat to the Block Exemption agreement for Multi-operator travel card schemes, at least for smart cards

Otherwise there is nothing too scary in what we have heard announced or discussed so far. Compared to the mega cost of rail projects, smart cards for transport ticketing is small fry; benefits to be gained are limited and potentially conflict with the goal of a greener society. But like everyone else, we’re all holding our breath…

One thought on “The Legislative Outlook for Transport Ticketing in the UK”

Trevor, interesting article. You and I did a good job for DfT on that “Detica Report”!

I think that one aspect of legislation to watch is the change in regulation to transport e-purses that the FSA will pass into UK law in April 2011. It is likely to mean that transport e-purses will no longer need e-money licences. This will clear the way for a national transport e-purse also.